Use the following table to illustrate the importance of macroeconomic policy coordination
Show that the two governments would have been happier if the two of them had adopted looser monetary policies, but given the policies that the other government did adopt, it is not in the interest of any individual government to change its course. Assume that each country wishes to get the biggest reduction in inflation rate at the lowest cost in terms of unemployment. This means that each country maximizes-??/?U, the inflation reduction per point of increased unemployment.
One needs to translate the outcomes of the table above into policy payoffs. Assume that each country wishes to get the biggest reduction in inflation rate at the lowest cost in terms of unemployment. This means that each country maximizes -??/?U, the inflation reduction per point of increased unemployment. This leads to the following table. The outcome of this game is on the lower right hand side of the table, where the two countries use very restrictive monetary policies rather than cooperating and using the better somewhat restrictive policies for both of them.
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Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is -.25, by how much would you have to raise the price of water?
a. 10 percent b. 25 percent c. 40 percent d. 100 percent
In 2016 the United States imported approximately ________ percent of all goods and services produced in the country.
A. 8 B. 3 C. 20 D. 15
If the United States raises tariffs on foreign goods, it may achieve
A. Higher production possibilities. B. Greater profitability of import-competing firms. C. Higher efficiency in domestic production. D. Higher U.S. exports.
Refer to the graph shown. The least-cost method of producing 1,000 units of output is shown at point:
A. A. B. B. C. C. D. D.